In this June 18, 2010, file photo, U.S. Sen. Michael Bennet, D-Colo., center, helps as SolarCity employees Jarret Esposito, left, and Jake Torwatzky install a solar panel on a home in south Denver. SolarCity, one of the nation’s largest installers of rooftop solar systems, on Tuesday, June 17, 2014 announced it is buying Silveo, a solar panel manufacturer. (AP Photo/Ed Andrieski, File)

SolarCity, Elon Musk’s renewable energy company, is betting big on the power of the sun.

The company announced in a blog post Tuesday that it will acquire solar cell producer Silevo for more than $200 million and begin building its own solar panels in the United States.

The move would turn the country’s largest solar panel installer into a vertically integrated manufacturer that could compete with China, which casts the longest shadow in the solar market.

SolarCity, currently purchases panels from other companies and leases them to homes, businesses and schools with little to no up-front costs. The company aims to keep monthly payments below what people already pay for electricity from their local grid.

By acquiring Silevo and continuing with that company’s plans to build a factory in upstate New York, SolarCity will become a one-stop shop for solar energy. The company hopes to produce a gigawatt’s worth of solar panels per year once the factory is completed within the next two years, according to the blog post.

Thanks to a flurry of production in China in the last few years, global manufacturing capacity currently exceeds total demand. But that surplus will not last long, as demand continues to rise.

“Without decisive action to lay the groundwork today, the massive volume of affordable, high-efficiency panels needed for unsubsidized solar power to out-compete fossil fuel grid power simply will not be there when it is needed,” Musk and SolarCity co-founders Lyndon Reve and Peter Reve said on the company’s blog.

Musk, the billionaire co-founder of PayPal, established Hawthorne-based rocket maker Space X in 2002 and founded Tesla in 2003. He and the Reve brothers founded SolarCity in 2006.

Paula Mints, chief analyst at SPV Market Research who has been following the solar panel industry for 17 years, said it is “highly unlikely” that SolarCity will be able to build a solar cell factory with a gigawatt of capacity in less than five years.

“It’s a huge announcement,” Mints said. “We’ll see if they actually get there.”

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There are about 300,000 homes in California using solar panels. That number is expected to grow by at least 50 percent by year’s end, according to California Solar Energy Industries Association Executive Director Bernadette Del Chiaro, who applauded SolarCity’s plans.

“There is nowhere for this market to go but up,” Del Chiaro said. “The consumer demand is only going to intensify as prices go down. Government interest in solving climate change is only going to increase. It’s a very smart bet.”

Photovoltaic technology was developed 60 years ago at Bell Laboratories, a telecommunications research facility based in New Jersey. Researchers discovered that by heating silicon atoms with sunlight, a chemical reaction occurs that produces electricity.

In 2013, 34 gigawatts of solar panels were sold globally. Only 2 percent were produced in the U.S. Nearly half came from China.

SolarCity employs 6,000 workers in facilities around the country, including a regional office in Playa Vista.

The company’s stock rose 18 percent after the Tuesday’s announcement. The company’s value has increased eightfold since going public in December 2012.